Superior Court Affirms Concept of Child Support Agreement as Convertible to Alimony.
Non modifiable child support provisions are infrequent but do come up occasionally when parties are negotiating Property Settlement Agreements. It typically arises when a dependent spouse asserts that a certain level of support must be payable regardless of the payor’s circumstances. In theory this could be effected by making the child support non modifiable in the agreement but case law has evolved stating that where the support is collectible by asset seizure or incarceration, a different standard must apply. See Nicholson v. Combs 703 A.2d 407 (Pa. 1997) This begot what arose in a Columbia County case, Long. v. Long 2022 Pa. Super. 129 where the parties agreed that if the payor spouse secured a support reduction he would pay an equivalent amount of alimony.
The parties settled property and alimony on the basis of $1,800 a month child support in June 2018 and were divorced two months later. Wife got the marital residence upon her refinance of it. One child was emancipated soon after the agreement was signed, and the husband continued to pay $1,800 per the agreement. In 2020 Husband secured a custody modification such that he now had shared custody of the remaining 14 year old. He then filed to reduce his support. His argument was that any alimony obligation was terminable when wife remarried; a concept arising from his interpretation of 23 Pa.C.S. Sec. 3706. Wife responded that the alimony was “reimbursement” alimony as contemplated by Zullo v. Zullo, 613 A.2d 544 (Pa. 1992), Bold v. Bold, 574 A.2d 552 (Pa. 1992) and Wagoner v. Wagoner, 648 A.2d 299 (Pa. 1994).
The published Superior Court opinion notes that a Property Settlement Agreement is a contract and governed by contract law. It adds however that under Section 3105(c) of the Divorce Code an agreement to pay alimony is non-modifiable while a judicial award of alimony is subject to modification under Sections 3701 and 3706. Parties can, of course, have their agreements allow for alimony modification upon changed circumstances but that needs to be specified in the written agreement. Courts are not authorized to read terminating or modifying events into an agreement without appropriate language reflecting that intention. Woodings v. Woodings 601 A.2d 854 (Pa. Super. 1992).
The case has a curious twist because the agreement was executed when alimony was still deductible. The 2017 Tax Reform Act that ended alimony as a deduction had a one year grace period. So, agreements made prior to December 31, 2018 still had alimony that was deductible. Husband asked for a hearing to assess what portion of his springing alimony obligation would be deductible. On this topic the Superior Court agreed and remanded the case. Thus, the obligation remained fixed at $1,800 despite the custody modification but if the 50/50 custody arrangement would have produced a $1,600 child support obligation, the remaining $200 would still be due but taxable to the recipient and deductible by the payor as alimony.
Some lessons come from this. In this case it seems that husband represented himself in the 2018 divorce settlement. It appears that he missed some issues which counsel could have helped him spot. The first is what could be termed a “catastrophe clause”. It is sometimes defined as “disability” but that is a phrase that itself should have some reliable definition. The better course is to define a catastrophe based modification as one where payor’s income declines to a specified triggering level and is not self-inflicted. The second is a custodial change as we saw in this case. If husband secured primary custody, he still owes the $1,900 but it would be all alimony and former wife would have to pay child support with the alimony included in her income. The last problem is defining alimony termination. In this case it is clear from the agreement that alimony ends when the child graduates high school. But we have seen agreements that makes the child support to alimony conversion but then neglects a termination date. Arguably that could produce lifetime alimony.
Nota bene: The alimony deduction laws seem like ancient history but fellow ancient readers may recall that “alimony” that terminates at a date traceable to a child’s emancipation is not deductible. 26 U.S.C. Sec 71(c).
